AT&T: 100 Million Wireless Users But Q3 Growth Slowed Without New iPhone

AT&T (NYSE: T) continues to benefit from smartphone adoption, crossing the 100-million subscriber mark during the third quarter. Although lighter-than-expected revenue and anemic growth troubled some investors following the release of its earnings results, the launch of a new iPhone in the current quarter means AT&T expects to have a nice holiday season.

Third-quarter revenue of $31.5 billion was just a tad under analyst expectations of $31.6 billion, which AT&T attributed to slower growth during a summer period in which it has usually seen an iPhone launch over the last four years. Net income was $3.6 billion, or $0.61 a share, in line with analyst estimates.

Financial analysts told the New York Times that AT&T may be suffering from growing pains as the wireless industry grows increasingly saturated: data released during CTIA a week ago showed that there are more wireless subscribers in the U.S. than people. It’s hard to grow when confronted with those kinds of numbers.

But AT&T said that more than half of its 100 million subscribers are now using smartphones, up 38 percent from last year. The use of Android smartphones doubled, and although AT&T only activated 2.7 million iPhones during the last quarter, it announced this morning that it had activated 1 million iPhone 4S devices in just the first week it has been on sale.

That means that the fourth-quarter numbers will likely improve, coupled with the fact that AT&T is getting ready to introduce its first LTE smartphones.

But expect AT&T to remind people that the best way for it and the wireless industry to grow would be for the U.S. government to allow it to acquire T-Mobile.